Case Study and Analysis of Financial Statements

Entertainments Group is one of the universe ‘s largest household amusements visitant attractive force operator. Over 30 million people visit their 52 attractive forces each twelvemonth. In the UK, these include Madame Tussauds, the London Eye, Alton Towers, Legoland, Sea Life, Thorpe Park and much more. They have, internationally recognized trade names in Legoland Discovery Centers, Madame Tussauds, Sea Life and Dungeons. They besides have the development skills internally to place, secure and buildA 4 orA 5 new Midway Attractions each twelvemonth. Priority of Merlin Entertainment Group is bringing of memorable experiences to their 1000000s of visitants underpinned by invariably monitored visitant satisfaction, universe category people development schemes, and theA really highest client service and Health & A ; Safety criterions. This sort of location based amusement, or more specifically visitor attractive forces, is dynamic, fast growth and merriment. Within this, Merlin Group EntertainmentA is genuinely alone both in footings of its comprehensiveness of quality branded concerns and its matchless commercial success. Merlin Entertainment Group uses selling construct which is easy applicable to a leisure services such as a event to win in their ends.

Harmonizing to Pine and Gilmour ( 1999 ) we moved beyond merely merchandises and services it is non merely merchandise any longer, these yearss it is more about prosecuting clients and giving them experience which they can non easy forgot and which will do them return to the topographic point. While Berridge ( 2007 ) explained that large impact on consumer has a design, illustrations are a well-known trade name names in leisure services like Merlin Entertainment Group. Events as services besides differ from merchandises in figure of ways, we have to see them to devour them. ( Bowdin, 2011 ) Harmonizing to these facts Merlin Entertainment Group has win in their connotations and go a leader in amusement concern. Fiscal Statements provided will show us fiscal wellness of the company. To to the full analyze house, it is of import to measure the value of the information supplied by direction. ( Lyn and Ormiston, 2010 ) The fiscal statements supply information about the fiscal place, public presentation and alterations in fiscal place of companies.A The complete set of fiscal statements includes the undermentioned constituents: balance sheet, income statement, hard currency flow statement, a statement of alterations in equity and notes to fiscal statements. The balance sheet is a fiscal study of the fiscal place assets, liabilities or what the house owes to others and equity what the inside stockholders or proprietors own on the peculiar day of the month such as the one-fourth or twelvemonth. Income or gaining statement presents the consequences of the operations- grosss, disbursals, non-profit and loss per portion for the accounting period. Merlin Entertainment Company has showed in their histories for 2009. that their net income was ?769 million, gross in this instance represents the sums received from clients for the sale of goods, specifically, admittances tickets, room gross retail and nutrient and drink gross revenues of which they are straight invested or spent on different sort of costs ?104.4 million, chief costs under this class represent the disbursal of nutrient and drink and retail consumables harmonizing to this their gross net income was ?664.6 million. Their indirect costs were ?428.9 million which means they earned ?235.7 million before finance income and costs, revenue enhancement, depreciation, amortisation and damage. Their loss of the twelvemonth 2009. was ?30.8 million, we count entire loss when we subtract net income which is ?769 million, cost of gross revenues which is ?104.4 million and entire disbursals. When we compare net income in 2009. with net income in 2008. we can see that their net income was ?662.3 million which means that their entire net income was less for ?106.7 million in 2008. since their cost of gross revenues were besides less than in 2009. and they were ?87.9 million their gross net income was ?574.4 million when we subtract this sum with all disbursals which were ?373.7 million we came to entire of ?200.7 million. This means that the difference between net income in 2009. and 2008. is ?35 million, they made bigger net income in 2009. for this sum of money. Merlin Entertainment Group besides win to cut down their loss compared to the twelvemonth 2008. for ?49.1 million. As provided in the Merlin Entertainment histories on page 6. we can happen more inside informations of exceeding and non- trading points in note 3. By definition, ‘the history balances on balance sheet must equilibrate ; that means that the sum of all assets must be the amount of liabilities and shareholders ‘ equity ‘ . ( Lyn and Ormiston, 2010 ) In the statement of fiscal place of Merlin Entertainment Company non-current assets represent long term investings and intangible assets, such as good will recognized in concern combinations, patents, hallmarks, right of first publications, trade name names, and franchise. Value of non-current assets as stated is ?1.891, 4 million. Detailss about assets are shown in notes 11, 12 and 13, good will represents sums originating on acquisition of subordinates and joint ventures. Current assetsA include hard currency, stock list, and marketable securities, prepaid disbursals and other liquidA assets that can be readily converted into hard currency. Value of current assets in 2009. is ?139.1 million. Value of entire assets is ?2,030.5 million. Current liabilities are what a company presently owes to its providers and creditors, and it shows that for 2009. current liabilities are ?224.7 million. These are short-run debts, all due in less than a twelvemonth, bank overdrafts, involvement bearing loans and adoptions finance, rentals, revenue enhancement collectible, and commissariats. Liabilitiess are: “ Sum of financess owed for assets supplied to our concern or disbursals incurred but non yet paid. ” ( Wood and Sangster, 2006, page 667 ) Non- current liabilities is opposite than current liabilities, it is duty that is non required to be satisfied in 12 months of the balance sheet day of the month. A liquidness ratioA measures a company ‘s ability to pay its measures. The denominator of a liquidness ratio is the company ‘s current liabilities, duties that the company must run into shortly, normally within one twelvemonth. We count liquidity ratio by spliting value of current assets and current liabilities, and it would look like this ?139.1 million / ?224.7 million = ?619.047. Assetss are anything the house owns or has title to. Net assets are: Net Assetss = Entire Assets – Entire Liabilities. The net assets figure therefore can be used as a step of the value of the concern. It is the value of everything the concern owns after all the debts have been taken history of. Net assets of Merlin Entertainment Company are ?481.6 million = ? 2,030.5 million – ? 1,548.9 million. in 2009. while in 2008. net assets were ?476.6 million excepting non-current stockholders loans. After the stockholders loans which is ?481.6 million and non-current stockholder loans net liabilities and entire equity are ?114.3 million. Equity capital represents invested money which is non repaid to the investors in the normal class of concern, it is the hazard capital stalked by the proprietors through purchase of the house ‘s common stock. Calculating the Acid- Test ratio we can bespeak whether company has adequate short term assets to cover its immediate liabilities without selling stock list. Companies with ratiosA of less than 1 can non pay their current liabilities Acid- Test Ratio is calculated by: Current Assets – Stockss / Current Liabilities Accounting ratios are utile when used to compare: one company ‘s consequences over a period of clip, company ‘s consequences with another company. It is best to compare with the best, such as a universe category company, or to compare with the industry criterion for that type of concern, or with the company ‘s consequences with those expected. Return on Investment, or ROI is step used to measure the efficiency of an investing or to compare the efficiency of a figure of different investings. The ROI measures how much of income is returned to company based on how much money are they utilizing to set into an attempt. ROI is of import to see because if an investing does non hold a positive ROI, or if there are other chances with a higher ROI, so the investing should be non undertaken. We calculate ROI: Net Net income / Capital x 100 = X per cent Cash Flow Statements and projections express a concern ‘s consequences or programs in footings of hard currency in and out of the concern, without seting for accrued grosss and disbursals. The Cash Flow Statements allows us to understand how a company ‘s operations are running, where is the money coming from, and how is it being spent. In the hard currency flow statement of Merlin Entertainment Company in the subdivision of operating activities we can happen minutess which include supplying services and hard currency effects of minutess and other events that enter into finding of income. Investing activities include productive assets that are expected to profit for a long period of clip, imparting money and roll uping on loans. We use depreciation to apportion the cost of touchable fixed assets, and amortisation to apportion the intangible assets. Merlin Entertainment Group has a net hard currency influx for the last twelvemonth from operating activities in value of ?223.6 million, their net hard currency escape from puting activities was ?100.8 million for current twelvemonth and from funding activities ?161.8 million. Cash and hard currency equivalents, cyberspace of bank overdrafts, at the terminal of the twelvemonth was ?86.6 million comparing with the twelvemonth 2008. when the same was ?114.9 million. Cash flow statement is of import for creditors, investors and others who use this information because it helps to find funding demands in the hereafter, success in fruitfully pull offing puting activities and effectivity in implementing funding and puting schemes, purpose of the hard currency flow statement is to mensurate concern liquidness. Net income is different from hard currency because net income is the money earned by the concern, and is represented on paper while hard currency is the influx of money it is a liquid plus of the concern. We can number hard currency yearss in manus when we subtract Cash/ Total Expenditure/ 365 and it tells us, if concern would hold stop tomorrow for any ground, how many yearss could we go on paying our measures. Merlin remains extremely cash-generative. During the twelvemonth, net hard currency influx from operations increased by ?14.5 million to ?233.6 million, compared with ?219.1 million in the old twelvemonth. Of this hard currency influx from operations, ?101.2 million was re- invested to fund capital outgo in Merlin ‘s bing estate, every bit good as the new Midway attractive forces. A farther net ?99.7 million was utilised to run into the hard currency involvement and other funding costs of Merlin ‘s bank adoptions. Merlin ‘s capital outgo programme is targeted at both keeping the quality of the bing estate whilst besides driving growing from strategic investings in the bing concern every bit good as developing an mean four or five new concerns per annum. Finally, in decision we can state after all information ‘s we have got about Merlin Entertainment Company that it is extremely profitable, they win to increase figure of visitants and cut down debt whilst at the same clip they continued to put in undertakings and new concern developments for the hereafter. However, does this mean that one-year study, which ever include Balance Sheet ( SOFA ) , Income Statement-Profit & A ; Loss, Cash Flow Statement can ever demo us the existent economic state of affairs of the company? Can be something incorrect with the manner fiscal consequences are reported, well foremost of the thing we can detect that one-year histories are non up to day of the month and company could ever pull off the consequences to demo better state of affairs than it truly is. If a company is runing in an environment which is invariably altering or extremely competitory environment, its past consequences, as reflected in historical fiscal statements, may non be an index of future consequences. Analysis of historical fiscal statements will non place operational issues or inefficiencies or any favourable or unfavourable alterations in the environment.